Cryptocurrency: Central banks worldwide under pressure to create digital money -Expert

Following the sudden rise in value and acceptability of Cryptocurrencies and the search by investors for alternative places to put their money, 60 per cent of Central Banks across the globe are under pressure to issue sovereign digital currency.

An Economist and Chief Executive Officer, Global Analystics Tope Fasua who disclosed this on Tuesday at the February edition of the Finance Correspondents Association of Nigeria (FICAN) monthly forum in Lagos, said though no banker to the government will support Cryptocurrency, they have no option than to begin to issue their own Central Bank Digital Currency (CBDCs).

According to him, about five countries namely China, Ecuador, Senegal, Tunisia and Singapore have issued digital currencies, not Cryptocurency, and bankers know that they are done if cryptocurrencies really take off and replaces traditional currencies.

Specifically, he said quite a number of bankers have invested in cryptos just to hedge their bet. But the traditional financial system is deeply rooted, organized and backed by government, unlike the Cryptocurrency mining space.

This is coming at a time when Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN), has honoured the invitation of the Senate over the ban placed on cryptocurrency-related accounts in the country.

Emefiele arrived at the National Assembly (NASS) on Tuesday to honour the request by the Senate Joint Committee on Banking Insurance and other financial institutions.

However, speaking on the topic: “Ban on Cryptocurrency-related accounts in Nigeria and concerns of global central banking,” Fasua stated that the proponents of the cryptocurrency believe that there is a need to push back and do something different, that will mimic the attributes of a gold-backed currency in view of durability and scarcity, but better than the current system by being smart, secure and not possible for central banks to issue at will.

His words: “If it started as a rebellion (which is the case), then you must think of the incentive for the global economy to sign on to that rebellion with you against the devil they know. This then means that until there is global acceptance of the currencies, it will continue to be easy to create panic in the crypto world and big players can dump the currency when they have achieved gains.

“It then becomes worse than the stock market because, for cryptocurrencies, the fundamentals are non-existent apart from an analysis of how many are adopting the currency and who is winning between an established traditional banking system and the new kids on the block.”

According to him, Cryptocurrency is heading to global single currency but one major challenge is that there is a lot of loses in it and that when most coiners die, no one is able to access their investments which ab initio are encrypted with passwords, passphrases and whatnot.

“People don’t usually plan to die. Now, this is where regulation helps in the financial markets. Apart from deposit insurance, which kicks in, in the event of the collapse of an insured and regulated financial institution, the relations of a dead account holder in a traditional bank could still have access to their balances,” Fasua stated.

Also speaking on the “Imperatives of SMEs as alternative source of income post COVID-19,” and Entrepreneur and the Creative Director (CD), Eleven Squared Enterprise Libby Ofem-Oke said though the pandemic has brought a lot of challenges, many people are still taking advantage of COVID-19 to cash out.

According to her, in this period of new normal, Small and Medium Scale Enterprises operators should leverage social media because it not only opens the door to new markets, a lot opportunities exists therein.

Offem-Oke added that though there are challenges in the Nigerian operating environment, entrepreneurs should always see them as stepping stones and remain focused, stressing that in order to be relevant, SMEs should keep rebranding no matter the cost.

“The system is frustrating but the key is, don’t give up,” Offem-Oke emphasized.

She further advised startups to structure their ideas if they are interested in getting funding from financial institutions because they require such documents as evidence of registration with the Federal Inland Revenue Service, anti-money laundering certificate, Lagos residence permit for those operating in Lagos State, trademark among others.